On May 13, 2022, the US District Court of the Central District of California issued a decision in Software Freedom Conservancy v. Vizio.
For more about the initial complaint see my previous post. In brief, SFC had sued Vizio in California state court, alleging that a violation of GPL was a breach of contract, and seeking declaratory judgment and specific performance (release of source code). SFC is not the author of the GPL code at issue, and the authors of the code are not party to the suit.
The issue in the removal motion was whether there was federal jurisdiction, sufficient to shift the lawsuit from state court to federal court. Federal courts in the US have exclusive subject matter jurisdiction over copyright claims, and diversity jurisdiction over other claims that are between parties in different states, and where damages are sought in excess of $75,000. 28 USC § 1332. But SFC’s complaint was neither a copyright infringement claim nor a claim for damages. This neatly avoided federal subject matter or diversity jurisdiction. The court said, “There is no dispute that SFC’s complaint alleges only state law claims, and the Parties agree that the action is removable only if SFC’s claims are completely preempted.”
The remaining question was whether the state law claims were pre-empted by copyright law. Preemption is a legal doctrine that reserves certain kinds of matter to the exclusive regulation of federal law. Under 17 USC 301a, federal law clearly pre-empts all claims that are within the scope of copyright law. Here, however, the court said the state law claim pled by SFC was different from a copyright claim. Therefore, the court in this case did not take jurisdiction over the matter away from the state court.
To support its preemption argument, Vizio argued unsuccessfully (relying on MDC v. Blizzard) that all violations of license conditions should only result in copyright infringement claims. But that was converse logic. MDC was about what cannot be a copyright claim, not what must be one.
Through the Looking Glass
The parties’ positions were unusual, because defendants generally prefer defending contract claims to copyright claims. Open source enforcers almost always bring the actions as copyright claims rather than (or in addition to) contract claims. Copyright generally affords more generous remedies than state law contract claims, including the possibility of statutory damages. Also, injunction is often available as a remedy under copyright law, but rarely under contract. So, SFC v. Vizio is an anomaly, where the plaintiff argued for contract claims and the defendant argued for copyright claims.
Moreover, there is a history of open source licensing pundits theorizing that open source licenses are “not contracts.” It has long been my view that this theory was misplaced. (I think, originally, that theory was intended to avoid contract formation arguments under the law of the 1990s, which arguments were largely sidelined in 1996 by the ProCD case (86 F.3d 1447 (7th Cir. 1996). But I am reading between the lines there.) GPL2 famously says, “You are not required to accept this License, since you have not signed it.” But the existence of a contract depends on the facts surrounding contract formation, and not so much on what the document says. It is more accurate to say that open source licenses need not be contracts to be enforceable, because violating their conditions provides the basis for a copyright infringement claim, as clearly established in US law, mainly under Jacobsen v. Katzer. Contract claims are therefore usually a belt-and-suspenders tactic in open source enforcement.
The law has never clearly articulated the answer to the “license or contract” question, but Jacobsen v. Katzer suggested contract claims were possible, as did Artifex v. Hancom. So in sum, there is case law saying copyright claims are possible, but none saying contract claims are impossible.
Neither a Win Nor a Loss, Yet
Some open source advocates are celebrating, but that celebration is probably premature. This result does not mean the federal court is saying there is a valid state contract claim, or that the remedy sought is available, only that there is no basis for federal jurisdiction.
Assuming the ruling stands and the case goes back to state court, there are a few possibilities:
- there is a state law claim for which the remedies sought are available
- there is a state law claim but the remedies sought are not available
- there is no sustainable state law claim
SFC still has a lot of bridges to cross–the highest and widest being the availability of specific performance as a remedy for breach of contract. Most legal commentators have long believed there is no basis for such a remedy under licenses like GPL, only damages for breach. And while injunctions are often available for copyright infringement, those injunctions are negative injunctions–orders to cease and desist using the infringed material. Specific performance, sometimes called a positive injunction, is a very rare remedy under contract law, and a court forcing a technology company to disclose proprietary information due to a breach of contract is virtually unheard of. Courts tend to order people to stop doing things, not to do them. The reason for this is deeply woven into our notions of civil liberty, granting courts only limited powers. Injunctive relief is an exceptional remedy, because it impinges on civil liberty. Courts can order you to go to prison (for crimes) or pay money (for torts), but they don’t usually order you to do much else. That’s in part because they don’t have the resources to police positive injunctions. When you read in the news about a court ordering someone to do something, it is usually part of a negotiated settlement or consent decree.
This begs the question of what will happen to open source adoption if SFC is successful. The resulting risk of everyone–not just authors–having authority to sue for enforcement of GPL may significantly disrupt the open source ecosystem. Back in the late 1990s, companies were extremely reluctant to use GPL code (like Linux) due to the perceived legal risks–which were in part trumpeted as FUD by anti-open-source actors like Microsoft. But over the years, the tech industry grew comfortable that the only risk of lawsuits was from authors, and most authors preferred informal enforcement to legal process. That process of acclimation took decades. A change in this assumption could cause companies to stop using the GPL software they have grown comfortable using over the years, and it’s not clear that would be a win for the open source ecosystem.